Within the real estate industry, the term secondary market refers to the buying and selling of existing interests in real estate funds or investment vehicles. Unlike the primary market, where investors commit capital at the start of a project and remain exposed throughout the full cycle, these transactions allow investors to enter assets that are already operating, with available performance data and remaining upside ahead.

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This type of transaction has gained relevance as a response to a long-standing characteristic of real estate: limited liquidity. For many years, investing required long-term commitments with little room for adjustment once capital was deployed. The secondary market offers an alternative, allowing investors to acquire or exit positions without waiting for a fund’s natural end.

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According to Preqin, transaction volumes in the real estate secondary market in 2025 exceeded pre-pandemic levels, driven by liquidity needs and portfolio reorganization. This figure reflects not only increased activity, but also a broader shift in how real estate investments are managed. Flexibility and asset-level visibility now carry more weight than early entry alone.

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A different approach

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The secondary market changes the investor’s starting point. Instead of allocating capital based on assumptions, decisions rely on verified information. Assets already generate income, show established occupancy patterns, and operate with known cost structures. This clarity reduces uncertainty and supports more accurate valuations.

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According to Campbell Lutyens, one of the main advantages of these transactions lies in access to stabilized assets, which enables more precise risk management. Analysis moves away from projections alone and focuses on observable results, a factor that becomes particularly relevant during periods of higher volatility.

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While this approach does not remove the inherent complexity of real estate, it allows investors to navigate it with greater clarity. Knowing what is being acquired and where the asset sits within the cycle provides stronger control over future performance.

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Liquidity and flexibility

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The expansion of the secondary market is closely tied to liquidity needs within real estate portfolios. Funds and institutional investors seek to monetize existing positions without unwinding an entire fund or forcing the sale of underlying assets, a process that is often slower and more expensive. This option becomes especially valuable when strategic priorities shift or economic conditions introduce new constraints.

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Preqin notes that a significant share of secondary transactions stems from portfolio restructuring processes. Rather than triggering forced exits, investors make deliberate decisions aimed at improving capital efficiency. Selling fund interests frees resources and allows capital to be redeployed without waiting for fund maturities.

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From the buyer’s perspective, the appeal lies in accessing projects with remaining potential while facing lower uncertainty than in early-stage investments. This balance explains why the secondary market has become a recurring tool rather than an exception.

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Operational visibility

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One defining feature of the secondary market is the role of real, operational information in decision-making. Visibility into consolidated income, sustained occupancy levels, and recurring expenses provides a solid foundation for analysis. This approach reduces reliance on overly optimistic scenarios that prove difficult to maintain over time.

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According to Campbell Lutyens, increased transparency leads to more consistent valuations and narrower gaps between expectations and final outcomes. This visibility becomes just as important as expected returns, since it supports more realistic planning. As a result, the focus extends beyond maximizing performance to understanding its source and durability, particularly in a sector where long cycles demand patience.

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Who finds value in this market

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Secondary markets in real estate attract participants with very different objectives and structures. For institutions managing large portfolios, each asset type holds a defined weight within the overall strategy. Over time, that allocation may no longer align with initial priorities. The secondary market offers a straightforward solution. If an institution wants to reduce office exposure and strengthen residential holdings, it can sell interests in a vehicle weighted toward offices and acquire interests linked to stabilized residential assets.

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Family offices approach the secondary market from a more wealth-preservation perspective. Their focus tends to rest on long-term stability rather than frequent capital rotation. Investing in stabilized assets allows them to avoid early phases where income streams are not yet established. Access to vehicles with operating histories enables analysis of rents, occupancy, and costs before committing capital, reducing reliance on theoretical forecasts and aligning better with extended investment horizons.

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Other participants are also showing growing interest. Wealth managers and insurance companies use the secondary market to improve cash flow predictability, particularly when future obligations must be met. Investors with sector experience rely on these transactions to diversify exposure without adding operational complexity. Across all profiles, the appeal centers less on rapid growth and more on having clear insight into how an asset actually performs.

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Maturity of the real estate sector

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Outlooks for the coming years point to further consolidation of the secondary market within real estate strategies. Secondaries Investor highlights that this development does not stem from a short-term trend, but from a deeper transformation in how investment decisions are made.

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The secondary market does not replace the primary market. Instead, it complements it. Both coexist within a more sophisticated ecosystem where real data, adjustment capacity, and active management take on a more prominent role.

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This consolidation is part of a broader transformation within the sector, marked by increased professionalization and a more analytical approach. These dynamics are explored in depth in the ebook Global Real Estate Investment Trends for 2026, which outlines the key movements shaping the market in the years ahead.